Government Fund Weekly News Roundup — SWFs Target Southeast Asia

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Jakarta, Indonesia

In the news this week: China Investment Corp. and
Singapore’s GIC eye emerging-market assets.
Several government funds invest in a new Hong Kong-based
real estate vehicle. And Norway’s SWF begins
divesting from coal-reliant companies.

Emerging Opportunities

Government funds continued to target investments in
emerging markets this week, focusing on economies in
Southeast Asia.

On Friday, Singapore’s GIC announced its first investment in
Indonesia’s logistics sector. The fund has
formed a joint venture with Jakarta-based real estate
developer Mega Manunggal Property to build warehouses in
the country.

As GIC’s CIO Lim Chow Kiat told the Sovereign
Wealth Center in a recent interview, the fund is
looking at opportunities in Singapore’s
"backyard" because the city-state’s
neighboring economies boast a young — and
increasingly affluent — consumer base. The rising
spending power of middle-class consumers is benefiting the
region’s e-commerce industry — and
boosting demand for warehouses and delivery hubs.

China Investment Corp. (CIC) is also
reportedly set to invest in Southeast Asia. The Chinese
fund is bidding for a portfolio of geothermal energy assets
in Indonesia and the Philippines that U.S.-based
multinational oil giant Chevron Corp. is looking to
offload.

Chevron’s revenue has been hit by the plunge
in global energy prices since 2014 and the company hopes
the sale of its Southeast Asian power plants will generate
up to $3 billion to bolster its cash reserves. CIC will
face competition for the assets from local power companies,
including Malaysia's Malakaff Corp. and Filipino geothermal
energy specialist Energy Development Corp.

Chinese Real Estate

China’s GDP growth slowed over the first
three months of 2016 to 6.7 percent, down slightly from
the previous quarter, according to the latest economic data. But government
funds continue to invest in China, demonstrating their
confidence in Beijing’s efforts to effect a
structural transition to a more consumer-driven growth
model.

This week, several unnamed state investors allocated
capital to a new China-focused real estate fund being
launched by Hong Kong-based private equity firm Gaw
Capital. Gaw has raised $700 million for the fund to date
and aims to hit a target of $1.3 billion before the end
of the year.

The company may have drawn on its existing relationships
with government investors as it started its
capital-raising for the new vehicle. The New Zealand Superannuation Fund and
Singapore's Temasek Holdings have invested in
Gaw Capital's previous real estate funds, while the Korea Investment Corp. teamed up
with the Chinese firm to acquire the Intercontinental
Hotel in Hong Kong for $940 million in 2015.

Norway’s SWF Excludes Coal-Reliant
Companies

Norges Bank Investment Management (NBIM), the arm of
the central bank that oversees Norway's sovereign wealth
fund, Government Pension Fund Global,
announced on Thursday that it has excluded 52 companies
from its portfolio because they breach its investment
guidelines over the use of coal.

In June 2015, Norway's Parliament voted in favor of a
plan to ban the fund from investing in companies that
derive 30 percent or more of their revenue from coal
mining or coal burning for energy generation. NBIM has
been assessing the fund's portfolio to gauge its exposure
to such companies since late last year and expects to
complete this process by the end of 2016. The management
team will sell the fund's stakes in the 52 companies it
has recently identified.

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